The Expiration of HAMP: What Options do Homeowners Have Now?
For years, the Home Affordable Modification Program (HAMP) provided a potential for relief for struggling homeowners to cure a default and to prevent the foreclosure of their home by their mortgage lender. HAMP was first enacted in 2009 as part of the Making Home Affordable (MHA) program in reaction to the subprime mortgage crisis.
Homeowners who were having difficulty affording their mortgage payments due to financial hardship could qualify for a modification of the mortgage loan through HAMP if they met certain criteria. Among the elements of a mortgage loan that could be modified through HAMP include lowering the interest rate, forbearance or reduction of the principal balance, and extending the term of the loan. In many situations, such a modification resulting in significantly more reasonable mortgage payments and allowed homeowners to retain ownership of their properties.
After helping millions of homeowners throughout the United States, HAMP was not extended again and the program expired on December 31, 2016, largely due to waning numbers of applicants and increases in property values across the country. While many people may have been surprised to hear that HAMP had ended, the Director of the Federal Housing and Finance Agency (FHFA) actually announced there would likely not be another extension of the program after 2016 more than a year and a half prior.
If you did not apply for a modification through HAMP by that date, you are not eligible to receive a HAMP-facilitated modification. However, this does not mean that you do not have other viable options to modify your mortgage loan and remain in your home.
Looking Forward after HAMP – Proprietary Modifications
Even without HAMP, mortgage loan modifications are still an important option for loss mitigation in lieu of losing your home to foreclosure. Throughout the housing crisis and in the years since millions of homeowners have sought private modifications of their home loans directly from their mortgage lenders and this option remains available.
The end of HAMP may bring some change to the process of proprietary modifications, however, including the following:
Timeline – Generally speaking, when you applied for a proprietary modification, the lender would first determine whether you met the qualifications for a modification through HAMP as an initial step in the process. You would have to wait on this determination before your lender or servicer began to independently evaluate your application for a proprietary modification, which could definitely result in a delay. Delays in the modification decision-making process can make a situation significantly worse for a homeowner, as they may fall further and further into delinquency or default. With the expiration of HAMP, screening for eligibility is no longer a necessary step and lenders can immediately begin the review of modification applications. A shorter timeline for modification decisions can provide benefits for homeowners sooner.
Possible Inconsistency – One thing that HAMP did provide for mortgage borrowers was a level of consistency for modifications because it was all government-regulated. There were specific criteria that must be met in order to qualify and the determinations were largely objective. Without this objective set of criteria, private lenders do not have a standard set of guidelines to model their own modification practices after. Many people may be concerned that without many other options for homeowners, mortgage companies can try to take advantage of the situation. Also, a wide discrepancy for who gets approved for modifications from one company to the next can cause confusion about what a homeowner needs to demonstrate to be approved for this type of loss mitigation.
The CPFB Speaks Out
Because of the concerns regarding inconsistency in private modifications, the Consumer Protection Finance Bureau (CPFB) has released guidance on what the agency hopes with be the guiding principles of loss mitigation after HAMP. The four primary principles are as follows:
Accessibility – Making information about loss mitigation options available and accessible to all homeowners.
- Sustainability – Using loss mitigation techniques intended to provide assistance through the end of the loan.
- Affordability – Offering modifications or other repayment plans that will actually make payments affordable for homeowners.
- Transparency – Providing homeowners with clear information about why a certain decision was made regarding a loan modification and what criteria was used.
Hopefully, private lenders will keep these principles in mind to help maintain a fair and even playing field for struggling homeowners when it comes to obtaining modifications.
Homeowners Can Still Seek Assistance From the Government
While we said goodbye to HAMP along with 2016, not every government-facilitated mortgage modification program came to a close. The following is some information on two federal modification programs of interest:
HARP – The Home Affordability Refinance Program (HARP) was considered to be the sister program to HAMP and it is still an active program until the end of September of 2017. HARP was extended into this year to help ensure the transition after HAMP was as smooth as possible. The options for modifying your loan under HARP are more limited than they were through HAMP and the criteria to qualify is different, though it can still be a beneficial program for the next few months.
Fannie Mae Flex Modification Program – The federal government did not let HAMP expire without any plans for a replacement program. At the end of 2016, the Federal National Mortgage Association (“Fannie Mae”) made the announcement that it was working to combine different modification programs into a single tool called the “Flex Modification Program.” While there is no set date for the program to begin, Fannie Mae estimated it would be implemented by October 1, 2017 (to coincide with the end of HARP) or perhaps as early as this spring.
Discuss Your Mortgage Modification Options with a Highly Experienced New York Foreclosure Defense Attorney
There continue to be many different options for homeowners to obtain a modification of their mortgage loan even after the expiration of HAMP. In addition, if you do not qualify for a loan modification, there may be other negotiable solutions to avoid losing your home to foreclosure, including filing for bankruptcy or a potential short sale.
At the Law Offices of Ronald D. Weiss, P.C., we understand the many tools that can help resolve your financial difficulties so that you can pay your mortgage and other necessary bills. We will work closely with you to find the best solution for your specific situation and know how to negotiate with your mortgage lender when needed to reach a mutually beneficial agreement. Whether you are fearing an impending foreclosure or are already facing a foreclosure action, do not delay in calling a New York mortgage modification lawyer at 631-479-2455 today.